Wealthy trial lawyer William Lerach, a big donor to liberal politicians who specialized in bringing class action lawsuits, has pled guilty to giving kickbacks. But under the terms of his guilty plea, he apparently will be able to keep most of his millions. Liberal politicians who oppose tort reform have received millions from Lerach and his cronies, and have been reluctant to return any of those donations.
Lerach gave kickbacks to class representatives, who then let Lerach run class-action lawsuits in ways that promoted Lerach’s interest, and not those of the nominal plaintiff class. A class-action lawsuit is supposed to vindicate the interests of a class of people, who are (except for the class representative) unnamed, but are legally considered a client to whom their lawyer owes a fiduciary duty. But in practice, it is often really the lawyer, not the class, that benefits from a class action lawsuit, with the lawyer receiving millions, while the class members receive worthless coupons. Indeed, Lerach once boasted that the great thing about his job as a class-action lawyer was that he had no clients.
Lerach’s lawsuits against corporations were typically harmful to their nominal beneficiaries, shareholders, since a “win” in one of his lawsuits just redistributed money from shareholders’ left pocket to their right, while siphoning off some of the money into the pockets of Lerach and his fellow lawyers. (When a corporation is forced to pay its shareholders, it does so by reducing the value of their shares — so what they receive comes out of their own pockets).
Many of the recipients of Bill Lerach’s largesse over the years have been liberal state attorneys general. CEI describes some of those contributions, and favors the trial lawyers received from AGs, in The Nation’s Top Ten Worst State Attorneys General.